For the next long-term EU budget 2021-2027, the Commission has unveiled several programmes that will further strengthen Europe's Economic and Monetary Union (EMU) and boost job creation, investment and innovation. To deepen EMU, on 31 May the Commission proposed to create a Reform Support Programme, with an overall budget of EUR 25 billion which will support priority reforms in all EU Member States, and a European Investment Stabilisation Function, which through loans of up to EUR 30 billion will help stabilise public investment levels and facilitate rapid economic recovery in cases of significant economic shocks in Member States of the euro area and those participating in the European Exchange Rate Mechanism (ERM II). The proposals combine the key principles of solidarity and responsibility at all levels and deliver on the commitments made by President Juncker in his 2017 State of the Union Address. In order to boost investments, on 6 June the Commission proposed the InvestEU Programme, which will bring together the multitude of EU financial programmes currently available while expanding the successful model of the Investment Plan for Europe, the Juncker Plan. The Commission is proposing that EUR 15.2 billion be earmarked for the Fund so that the EU budget can provide a EUR 38 billion guarantee, and thereby trigger more than EUR 650 billion in additional investment across the EU over the 7-year period. The InvestEU Fund supports four policy areas – sustainable infrastructure; research, innovation and digitisation; small and medium-sized businesses; and social investment and skills – and will have a single, coherent governance structure and reporting requirements, avoiding overlaps.

“…we must equip the EU and our euro area with the necessary tools to deliver even more prosperity and stability. Today's proposals are about making the Economic and Monetary Union the protecting and uniting force that it was conceived to be.

The Investment Plan for Europe has proven a success when it comes to mobilising private investment and creating jobs in Europe… With InvestEU, we are taking this successful model and expanding it across the many EU financing programmes on offer.”

The Commission is proposing new rules that will allow market-led solutions to support further integration and diversification within Europe's financial sector, leading to a stronger and more resilient Economic and Monetary Union. The proposal made on 24 May will remove unwarranted regulatory obstacles to the market-led development of sovereign bond-backed securities (SBBS). These securities would be issued by private institutions as claims on a portfolio of euro-area government bonds. SBBS would, by design, not involve mutualisation of risks and losses among euro area Member States. Only private investors would share risk and possible losses. Investing in such new instruments would help investors such as investment funds, insurance companies, or banks to diversify their sovereign portfolios, leading to more integrated financial markets. It would also contribute to weakening the link between banks and their home countries, which—despite recent progress—remains strong in some cases. SBBS would not negatively affect existing national bond markets.

Meeting on 24 May, euro area finance ministers were informed about the staff-level agreement concluded by the institutions and the Greek authorities on 19 May and the Commission presented to them 54its 2018 spring forecast, which was published on 3 May. The Eurogroup also held a follow-up discussion on spending reviews. These help governments detect areas where savings and efficiency gains could be made and where spending could bring greater value for money. Finance ministers from 27 EU Member States exchanged views on the completion of the banking union and the future role of the ESM in preparation for the upcoming leaders' meeting in June. Meeting in Council format on 25 May, EU finance ministers agreed on proposals to reduce risk in the banking industry by strengthening rules on capital requirements and on bank recovery and resolution. The proposals are intended to implement reforms agreed at the international level following the 2007-08 financial crisis. The Council also adopted rules aimed at boosting transparency to prevent aggressive cross-border tax planning.

The European Investment Bank (EIB) signed a EUR 250 million loan agreement on 31 May with the Swedish telecom company Ericsson for research, development and innovation in fifth generation mobile telecommunications systems (5G). The loan was made possible by the European Fund for Strategic Investments (EFSI), the central pillar of the Investment Plan for Europe, which was launched by the EIB Group and the European Commission to boost the competitiveness of the European economy. On 31 May, the EIB also confirmed that it is providing EUR 35 million in new financing for the expansion of strategic oil reserves in Cyprus. To support the rehabilitation and modernisation of the Dutch “Afsluitdijk” dam, the EIB announced on 30 May that it is providing EUR 330 million. In Germany, a new KfW programme, part of the German government's Tech Growth Fund initiative, will strengthen financing for SMEs on the path to the digital future by means of a 50% EFSI guarantee. In Poland, the European Investment Fund (EIF) and CVI Dom Maklerski, the CEE leader in private debt financing, signed a guarantee agreement supporting a EUR 200 million portfolio of bonds to innovative Polish companies. Meanwhile, on 24 May the EIF and Caixa Geral de Depósitos signed a new guarantee agreement on a portfolio of loans of EUR 200 million to improve access to finance for SMEs in Portugal. 

Seasonally adjusted GDP rose by 0.4% in both the euro area and the EU during the first quarter of 2018, compared with the previous quarter, according to an estimate published by Eurostat, the EU statistical office. In the fourth quarter of 2017, GDP had grown by 0.7% in both zones. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 2.5% in the euro area and by 2.4% in the EU in the first quarter of 2018, after +2.8% and +2.7% respectively in the previous quarter. Among Member States for which data are available for the first quarter of 2018, Latvia and Poland (both +1.6%) recorded the highest growth compared with the previous quarter, followed by Hungary and Finland (both +1.2%). Slightly negative growth was observed in Estonia (-0.1%) while GDP in Romania was stable.

The EU economic and financial landscape – and economic governance – continues to evolve in 2018. ECFIN E-news aims to summarise for you the latest key developments and invites you to read further on the topics you find most interesting. We would like to kindly ask you to let us know your views and suggestions. What do you like about the newsletter? What could be improved? Thank you for sharing your thoughts by spending just a few minutes to answer the online questionnaire. We appreciate your feedback.

In the latest edition of Real Economy, Euronews examines social protections or the lack thereof. Four out of 10 Europeans in the labour market are now self-employed or engaged in temporary work on a part- or full-time basis. As Europe’s social security systems were geared for a time when most people worked full-time for the same employer for years—not in the ‘gig’ economy—it may be time for social protections to evolve as much as work life has. Across Europe, workers who don't have full-time jobs have to navigate a minefield of questions regarding access to unemployment benefits, healthcare, maternity, old age or accident benefits. Many of these workers are very vulnerable. Addressing the need for stronger social protections, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, notes that “when there is less inequality and a better risk protection, people invest more in their own lives, they feel more part of society, they work harder and better.” Thyssen adds that social protections need to be improved without killing flexibility, as flexibility creates new jobs.